Just sat BTC

System
System Posts: 100,534 πŸ€– Admin πŸ€–
edited June 18 in AAT student discussion
Thought the paper was ok on the whole. The first section i found the hardest for some reason. I got confused as to what trading profits refered to mainly because they normally get you to do everything in stages then you normally get to the question that ask for net profit chargeable.
I ended up putting my trading profit less the IBA and capital allowance (this was also tricky as it never asked you to do the computation in a previous task). What did you guys do on the recovery of the bad debt, i left all that bad debt in as i thought all were allowable but i think thats wrong!!!
I got to the point where is started to question everything i'd done even putting the rent in the tax form under other income (almost forgot about that too)!
The second part i found more doable. Shares were pretty standard nothing scarey. Capital gains was also ok, though i didn't take out the private use on the MD's car, hope that's right! Calculating the PCTCT was standard but working out the tax payable was alittle tricker.
Luckily my teacher felt sure that dividends would be coming into it, i grossed up mine and applied the 11/400 marginal relief then charged £100k for the shares at 30% and the remaining pctct at 29.08%.

How did you all feel about the paper?
Β«1

Comments

  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Tax was certainly not my strong point especially as I only did to get the basics under me for the tax paper in CIMA.

    I thought the paper was ok. I'm almost 100% certain I've made more silly mistakes than anything else, and I'm hoping that they'll see the thought was there even if it is wrong :lol:

    The private usage was thrown in as a trick (i hope) as I learned that you disregard the private use completely with companies. You would reduce the allowance if it were a sole trader!

    I also left the bad debt as they were specific rather than general provisions.

    The general feeling I have with this exam is that I went completely out of my comfort zone and tried something I probably won't need to deal with in my role. It was a challenge for me and I put all my effort into it. That's all I could ask of myself and if I fail, well then hey, at least I can say I tried! :D

    Only 1 left now!

  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Hi

    I thought it was unusual to have to calculate the capital allowance as part of the trading profits question and not a question on its own. :? I also left bad debts as they all seemed allowable. I also left redecoration as it is revenue expenditure but I don't know if I should have included it as it is not wholly trading expenditure.

    I completely forgot about the rental income. :x However I do think I got lots right so I'm not too worried. :)

    There is no private usage for a limited company so you were right to ignore that.

    I was fine with the dividends received, but I didn't have a clue with the dividends payable. I know some people did the £100k at 19% but that is for small companies and a minimum isn't it???

    Overall I felt the paper was fine. The usual topics were there (but some in a slightly different format), a few potential tricks for those who don't know the subject well enough (private use, bad debts, etc), and two things not on past papers (dividends paid and installments for corporation tax).
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Well good luck to all,

    1. Who added back the redecoration as a disallowable expense?

    2. Who put the £15 000 rent received in the tax return under other income?
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC
    1. Who added back the redecoration as a disallowable expense?

    2. Who put the £15 000 rent received in the tax return under other income?

    1. i added back the recoration cost, my reasoning was that it was a capital expense. not sure if this is right though.

    2. i put the 15k rent in as other income along with the captial gains.
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC
    I know some people did the £100k at 19% but that is for small companies and a minimum isn't it???

    I charged the 100k at 30% i hope that is right too!! i thought it went like this;

    0-10k = 0%
    10k-50k = 19% +MR
    50k-300k = 19%
    300k-1500k = 30% +MR
    1500k onwards = 30%

    Please someone tell me that's right!
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    £100k falls into the 19% range.

    The Marginal Rates are MINUS Marginal Relief.

    Scott.
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    I dont think it was charged at 19% - Dividends paid only effect companies in the first two bands, thats my understanding.
    Please dont tell me im wrong, let me live in hope :roll: :roll:
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    I agree with planetstud - only applies to companies with 'Profits' less than £50,000.

    Like everyone else, I'm sure I made other mistakes though - in fact I know I did !! Ah well...

    Susanne
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    I didn't know what to do with the 100K dividends.

    the Osborne Text book has only 1 small paragraph relating to this and I quote "Payment of dividends is not an allowable expense. However if these occur in the accounts after the net profit that we have used as the starting point for our calculation, there will be no need for an adjustment"

    Ok I understnad that but the tax adjusted profit we were given of £1,100,000 didn't state if that was calculted from a net figure before or after the dividends were deducted.

    If this assumption is correct I think the dividends should have been left alone as usually the dividends are deducted after net profit. All in all I think it was a bit ambiguous.

    I also left in the redecoration as I was not sure if it was capital or revenue expenditure, in hignsite I think it's capital although I believe in calcualting property income it would have been an allowable revenue expense as it is repairing and putting things back into a condition that they once were and not an improvement which would be capital.


    Your thoughts and comments


    Kev

  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    :shock: I really didn't like the BTC exam at all. It seemed like there was an awful lot of content in section 1 to get through. I've never come out of an exam feeling so unsure about whether I may have passed or not, I just can't tell! I definitely cocked up in silly places, but I think my general layouts were ok and I remember the taper relief, marginal relief and franked investment income bits.....let's hope it's enough!
    I know it's a bit of a wait now, but best of luck with the results everyone! :?
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    The bad debts you had to add back the 1,005 it was shown in bracket and related to previous bad debts recovered.... surely that would of been allowed as an expense in the previous years tax calculations?

    Redecorting I left in as its repairs and maintanence not structural enhancement?

    The tax form was the "self-employed" pages so therefore no need to put on the rental income? That goes on a seprate page else where in the tax return.

    I think you were given the rental information to answer the memo about offseting losses nothing more.

    My understanding of the dividens is that you add dividens received after the PCTCT to arrive at your "total profit" so you then use these two figures (PCTCT & Profit) in your marginal calculation?

    Dividends paid were to shareholders? Not taxable? Its only NCD shares that attract tax?

    Regards

    Dean
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Hi Dean

    Did it say trade bad debts recovered? I can't remember now, but I'm pretty sure none of the bad debts should have been added back in. The Osborne book had some similar examples in the practice exams at the back.
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    There were three figures show along the line of this

    (1005)
    120
    1000

    Regards

    Dean
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    i dint add any of the bad debts back, i thought they were all allowable!

    there was no increase in general provision!
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Sorry, I can't remember what the description for each of the bad debt figures were but I'm very very confident that none of them should have been added back in. I guess we will find out when they publish the answers. :lol:

    Is there anyone else who thought any should be added back in?

    I'm not sure about the redecoration. I left it because I figured it was revenue expenditure, but now I'm not so sure. It wasn't trade expenditure so maybe it should have been added in and theoretically deducted from the rental income as it was property revenue expenditure? I guess it depends what was redecorated, was it the rental property or where the self employeed person does business????? I just don't know which was correct.
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC
    The bad debts you had to add back the 1,005 it was shown in bracket and related to previous bad debts recovered.... surely that would of been allowed as an expense in the previous years tax calculations?

    I thought this to start off with but when i complete my tax form it looked all wrong to have minus figure in the un not allowable coloum.
    Then i got to thinking if you left the other two in (they were both allowable) then if you left the (1005) it would reduce what was already there any way. If you were to take it out again in efect you are doing it twice?
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC
    Dividends paid only effect companies in the first two bands, thats my understanding.

    Bugger i think you are correct, something to do with ppl who aren't assoctiated with the business.

    Ahh well i think i got everything correct up untill that point.

    30% on the pctct less MR (upper limit - total profit x pctct/total profit x 11/400).
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Oh my goodness,

    I have just discovered this thread and am now totally confused.

    I left the debts alone!

    I also thought about the rental income for the tax return then decided not to enter it.

    My figures matched my calculations and the accounts received but other have mentioned minus figures and not getting them to reconcile so now do not think I have this right.

    Section 2 - made the classic mistake of apportioning for personal use on the car :oops:

    Task 2.4 of mine is wrong but showed workings so maybe

    I am now really worried about PTC back to the books for me.

    :cry:
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC
    Then i got to thinking if you left the other two in (they were both allowable) then if you left the (1005) it would reduce what was already there any way. If you were to take it out again in efect you are doing it twice?

    I think you have a point there!! :(

    Regards

    Dean
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    I thought this was an easy paper, but since sitting it am starting to think maybe I found it too easy and have actually failed it. Did anybody do their IBAs over 25 years, I know nearly all the students in my college did it over 20 years, I though that was a sneaky question to start with
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Yep I did mine over 20 years :)

    Regards

    Dean
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Was it not supposed to be 20 years? I did mine over 20 years.
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    IBA's are calculated over 25 years at 4% for the original owner. Then on the remaining life for any subsequent owner.

    Scott.
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Yep, which is exactly what is was... the orginal owner held it for 5 years.

    Regards

    Dean
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    The original owner did own it for 5 years, however couldn't claim IBAs as he used the building to claim a rental income. This is what I'm led to believe.
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    I also assumed that the original owner would not have claimed IBA as it was an investment asset. Don't know if its right,but glad I'm not the only one!
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC
    3. Until 31 December 2004, Shabnam Ali had rented her premises from a landlord, Daniel
    Wealleans. On 1 January 2005, Shabnam Ali bought the premises from him for
    £145,000. Daniel had bought the premises new on 1 January 2000 for £110,000. The
    premises were brought into immediate use and have been used for industrial purposes
    throughout.

    It had been brought into industrial use, with immediate effect.... its still an industrial building whether its been used for rental purposes or not isn't it?

    Regards

    Dean

  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    Didn't know then and still don't know now. I knew it had been used for an industrial purpose, but not by the owner, so was (and am) perplexed.

    Jackie :roll:
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    I just thought it was £110,000 divided by 20 years as five years had already been claimed, and you use the lower of the initial purchase price and the sale price???
  • System
    System Posts: 100,534 πŸ€– Admin πŸ€–
    Re:Just sat BTC

    My worry was that I didn't think the original owner could claim IBA because he was using it for rental income, and I didn't think that she could claim it as she didn't own the building at the time. So did anyone claim IBAs before she bought it? I had never come across this in any of the examples I studied so I was stumped.

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